Court File and Parties

COURT FILE NO.: FC-18-617 DATE: 2019/06/17 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PERRY WILLIAM MAX KELLY, Applicant -and- VALERIE COLEMAN KELLY, Respondent

BEFORE: Justice P. MacEachern

COUNSEL: Julius Dawn, for the Applicant Diana Carr, for the Respondent

HEARD: February 19, 2019

Endorsement

[1] This is a motion by the Respondent, Ms. Coleman Kelly, for interim spousal support. In response, the Applicant, Mr. Kelly, has brought a cross-motion seeking an order for the sale of the matrimonial home and summary judgment dismissing Ms. Coleman Kelly’s claim for an unequal division of the sale proceeds.

[2] For the reasons below, I order Mr. Kelly to pay interim spousal support to Ms. Coleman Kelly in the amount of $2,300 per month, make an order for the sale of the matrimonial home with the net proceeds to be held in trust pending further agreement or court order, and dismiss Mr. Kelly’s motion for partial summary judgment.

Background

[3] The parties married on May 29, 1993.

[4] Ms. Coleman Kelly states that the parties cohabitated prior to marriage from November of 1991. Mr. Kelly does not contest this on this motion.

[5] The parties separated in the fall of 2014. Mr. Kelly states they separated on October 1, 2014. Ms. Coleman Kelly refers to two different dates of separation in her pleadings – August 28, 2014 and September 19, 2014.

[6] Ms. Coleman Kelly is 57 years of age. Mr. Kelly is 61 years of age. Mr. Kelly retired on March 31, 2014, prior to separation, at the age of 57, from his employment with the federal government due to medical issues. Mr. Kelly now receives a pension and also works as a martial arts instructor.

[7] The parties have one child together, who is now 24 years of age. At the time of separation, the child resided with Ms. Coleman Kelly in the matrimonial home. The child was in school until May of 2017 and continues to reside with Ms. Coleman Kelly. The child has some learning disabilities, and struggles with anxiety and depression.

[8] The matrimonial home is located at 3725 Sixth Street, Ottawa, Ontario. It is jointly owned. Mr. Kelly moved out of the matrimonial home on October 30, 2014. Ms. Coleman Kelly has remained in the home since that date.

[9] Mr. Kelly provided Ms. Coleman Kelly with spousal and child support after separation until November of 2015, when he stopped. At that time, Mr. Kelly advised Ms. Coleman Kelly to use the funds available on the line of credit for her support, which she did. The issues of child and spousal support that may be owed from the date of separation, and in particular since November of 2015, along with a reconciliation of amounts withdrawn from the line of credit and occupation rent will need to be resolved at trial, along with Mr. Kelly’s claim for occupation rent.

[10] At this point, Ms. Coleman Kelly seeks interim support, primarily because of Mr. Kelly’s demands that the matrimonial home be sold. She is agreeable to the home being sold if she receives interim support. Ms. Coleman Kelly states that it is less expensive for her to live in the matrimonial home, and that she has insufficient financial resources to support herself if the home is sold without interim support being paid. The matrimonial home is mortgage free, although the line of credit is secured against the home. Ms. Coleman Kelly has been paying the monthly payments on the line of credit, although the parties agree that she has been making further withdrawals from the line of credit to do so.

[11] This Application was commenced on March 27, 2018. Both parties seek a divorce in their pleadings.

Interim Spousal Support

Legal Framework

[12] This is a motion for interim spousal support pursuant to section 15.2(2) of the Divorce Act.

[13] Sections 15.2(2) of the Divorce Act set out the court's jurisdiction to make an interim order requiring a spouse to pay such spousal support as the court thinks reasonable pending the determination of the application for a final spousal support order.

[14] The legislative criteria under the Divorce Act for granting temporary spousal support orders is identical to those relating to a final support order. Pursuant to section 15.2(4), in making an interim spousal support order, the court shall take into consideration "the condition, means needs and other circumstances of each spouse," including:

a. The length of time the spouses cohabited; b. The functions performed by each spouse during cohabitation; and c. Any order, agreement or arrangements relating to support of either spouse.

[15] Pursuant to section 15.2(6), an interim spousal support order should:

a. recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; b. apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; c. relieve any economic hardship of the spouses arising from the breakdown of the marriage; and d. in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[16] The following general principles apply to motions for temporary spousal support [1]:

a. The party claiming interim spousal support has the onus of establishing that there is a triable ( prima facie ) case, both with respect to entitlement and quantum. The merits of the case in its entirety are to be dealt with at trial; b. In the event that a spousal support claimant cannot establish an arguable case for entitlement to spousal support, the motion for temporary relief should be dismissed, even if the claimant has need and the other party has the ability to pay; c. The primary goal of interim spousal support is to provide income for dependent spouses from the time the proceedings are commenced until the trial. It is not the role of the court to undertake the type of analysis required under s. 15.1 of the Act when determining long-term spousal support. An order for interim spousal support is intended to provide a reasonably acceptable solution to a difficult problem until trial. Interim support is meant to be in the nature of a "holding order" to, insomuch as possible, maintain the accustomed lifestyle pending trial; d. The court is not required to carry out a complete and detailed inquiry into all aspects and details of the case to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. That task is for the trial judge; e. Assuming that a triable case exists, interim support is to be based primarily on the motion judge's assessment of the parties' means and needs. The objective of encouraging self-sufficiency is of less importance.

Analysis

[17] I find, based on all of the evidence before me, that Ms. Coleman Kelly has a triable ( prima facie ) case to spousal support, both for entitlement and quantum, on a compensatory and needs basis.

[18] I find that for the purposes of interim spousal support calculations, Mr. Kelly’s income is $77,213 per year and Ms. Coleman Kelly’s income is $10,908 per year.

[19] Mr. Kelly’s income is made up of $8,532 per year that he receives from a taxable disability pension, $14,501 per year that he receives from a CPP disability benefit, and $54,180 per year that he receives from his public service superannuation pension.

[20] Ms. Coleman Kelly argues that Mr. Kelly has other income or an ability to earn income through his martial arts works. I have not included additional income for the purpose of this interim support motion. The issue of whether other income should attributed or imputed to Mr. Kelly, for the purpose of support, can be determined at trial.

[21] The source of Ms. Coleman Kelly’s income is her CPP disability income. Ms. Coleman Kelly states that she has a number of injuries and lives with chronic pain that prevents her from seeking employment or work.

[22] The parties’ cohabitated for a period of approximately 23 years. During that time, Ms. Coleman Kelly states that she provided most of the homecare and child rearing responsibilities, which included addressing the child’s learning disabilities. This is supported by the fact that Ms. Coleman Kelly only worked outside of the home for a brief period during the marriage, in 1991.

[23] Mr. Kelly, on the other hand, was employed by the federal government continuously on a full-time basis during the marriage, except for his period of leave from August 9, 2012 to his retirement. Mr. Kelly also spent time outside of the home developing his martial arts business and publishing a number of books. Although Mr. Kelly disputes Ms. Coleman Kelly’s role during the marriage, and her current health, claiming that she was abusive and an alcoholic, I do not accept these claims at this time, as they are difficult to reconcile with Mr. Kelly’s employment outside of the home, and, therefore, the probability that Ms. Coleman Kelly was primarily responsible for the caregiving obligations that their child required, as well as homecare.

[24] Ms. Coleman Kelly also contributed approximately $200,000 from a personal injury award received during the marriage to the matrimonial home. These funds would have otherwise been excluded from her net family property for the purpose of equalization. This factor is relevant to her claim to compensatory spousal support, particularly depending upon the outcome of Ms. Coleman Kelly’s claim that she should receive two-thirds of the proceeds from the sale of the home based on an oral agreement between the parties.

[25] All of the above factors support that Ms. Coleman Kelly has a triable claim to entitlement and quantum of spousal support at trial, which warrants an interim spousal support award.

[26] Mr. Kelly’s main argument against Ms. Coleman Kelly receiving interim spousal support is that he states he is effectively living off of his capital, being his pension, and that Ms. Coleman Kelly should be required to live off her capital at this point as well, if she chooses not to seek employment. Mr. Kelly argues that doing otherwise would amount to “double dipping” which, pursuant to the Supreme Court of Canada’s decision in Boston v. Boston, [2001] 2 S.C.R. 43, should be avoided.

[27] Mr. Kelly states he is prepared to make an advance to Ms. Coleman Kelly which she can use for her support, as long as this is credited to the equalization payment that he owes her. This equalization payment has not yet been agreed upon. The primary reason why Mr. Kelly owes Ms. Coleman Kelly an equalization payment is because of the value of his pension.

[28] I reject Mr. Kelly’s argument for a number of reasons. First, Ms. Coleman Kelly has not received the equalization payment yet. The equalization payment that Mr. Kelly owes to Ms. Coleman Kelly is in Mr. Kelly’s hands.

[29] The second reason is that the amount of the equalization payment has not yet been finalized between the parties. Ms. Coleman Kelly claims prejudgment interest on the equalization payment from the date of separation, and this interest continues to accumulate. Whether spousal support is paid will be a factor in determining Ms. Coleman Kelly’s entitlement to prejudgment interest at trial.

[30] Third, and related to the above two points, Mr. Kelly continues to receive the full benefit of his pension, which is the primary asset that gives rise to the equalization. This benefit should be shared pending the equalization payment being paid.

[31] Fourth, I reject Mr. Kelly’s argument that by receiving his pension as income, he is effectively depleting his capital. Mr. Kelly has not provided me with any evidence in support of this assertion, but simply asks me to recognize it as a matter of common sense. I do not.

[32] Mr. Kelly receives a pension under the Public Service Superannuation Plan. This is a defined benefit pension plan. Mr. Kelly is entitled to receive a defined benefit, indexed to the cost of living, for the rest of his life. The amount of this defined benefit is guaranteed for his life, and it is indexed to inflation.

[33] Mr. Kelly argues that the value of his pension is being depleted – being the lump sum value that is calculated in the same manner as the Family Law Value for the pension. The Family Law Value of this pension that is included in Mr. Kelly’s net family property, and used to calculate the equalization payment, reflects the present value of this payment stream over the expected duration of Mr. Kelly’s life, based on a number of variables, including assumptions for life expectancy, interest rates and inflation. If this is the value that is being depleted, and Mr. Kelly has not provided me with any evidence in support of this, the value is only diminishing because, as Mr. Kelly ages, his future life expectancy is shortened [2]. But the value of Mr. Kelly’s benefit from the pension on a monthly basis will not decrease.

[34] Mr. Kelly has not provided me with any valuation reports that support his claim that he has been depleting his capital by receiving monthly pension benefits from his pension. The only evidence to which he refers are the estimates for the maximum transferrable amount of the pension prepared by the Public Service Pension Plan on August 28, 2014 and August 1, 2018. Pursuant to the Pension Benefits Division Act, the maximum transferrable amount represents 50% of the value of the benefits accumulated during the period in issue, in this case, the period of marriage.

[35] Mr. Kelly has not provided evidence regarding how the maximum transferable amount under the Pension Benefits Division Act is calculated in comparison to the Family Law Value under the Family Law Act. There are a number of differences between the variables applied in each calculation. But for the purposes of this motion, I accept that the calculation is similar.

[36] On August 28, 2014, the maximum transferrable amount of Mr. Kelly’s pension was valued at $425,534. On August 1, 2018, it was valued at $404,317. During this 4 year period, the maximum transferrable amount reduced by approximately $21,000. Mr. Kelly argues this shows that he has been depleting his capital. It does not. Aside from the lack of evidence for what caused this decrease (i.e. whether the change was due to different interest rates, inflation, different dates for the period valued, or other factors) and how it relates to Mr. Kelly’s claim that he is “drawing down on his capital”, Mr. Kelly also ignores the fact that during this 4 year period, he received approximately $216,000 in monthly benefits from his pension (the current annual benefit of approximately $54,000 multiplied by 4). Yet the maximum transferrable value only decreased by $21,000.

[37] Mr. Kelly argues that it would not be fair to him to pay interim spousal support from his pension when the value of his pension at the date of separation, which he argues was higher, is what the equalization payment will be based upon. I do not agree that this argument warrants refusing Ms. Coleman Kelly interim support at this stage. Any issue regarding post separation adjustments to equalization due to use of capital assets, including the payment of support, can be addressed at trial based on full evidence, which may include expert evidence, and further valuation reports that set out what portion of Mr. Kelly’s pension was accumulated during the marriage, what portion was accumulated prior to marriage, and the impact, if any, arising from payments made after the date of separation.

[38] Mr. Kelly also argues that after equalization, he and Ms. Coleman Kelly will have the same asset base from which each should be required to draw for their support. This is not the case, as Mr. Kelly has other assets, including assets that will be deducted from his net family property, and not included in equalization. This is relevant to Mr. Kelly’s ability to pay support.

[39] Ms. Coleman Kelly has provided me with calculations prepared under the Spousal Support Advisory Guidelines (SSAGs) which provide that a low range of support is $1,906 per month, mid-range is $2,224 per month and high range is $2,542 per month.

[40] Ms. Coleman Kelly seeks interim spousal support in the amount of $2,600 per month. Ms. Coleman Kelly has filed a budget that she requires $50,379 per year to meet her expenses. This budget is actually somewhat modest in comparison to Mr. Kelly’s expenses, which he budgets at $74,098 per year. I find that both budgets are inflated and unrealistic, given the parties’ combined income is only approximately $88,000 per year (Mr. Kelly’s income of $77,213 plus Ms. Coleman Kelly’s income is $10,908 per year).

[41] Ms. Coleman Kelly lives with her daughter. Her expenses include expenses that benefit her daughter, but she has not shown any financial contribution from her daughter towards these expenses. Her daughter receives ODSP income of approximately $12,000 per year. Her daughter also has earned additional income from employment in the past.

[42] Taking into account Ms. Coleman Kelly’s income, her daughter’s expected contribution to expenses, and her reasonable needs, I find that interim spousal support is payable at $2,300 per month. This order is made taking into consideration Ms. Coleman Kelly’s prima facie case for spousal support on a compensatory and needs basis, the SSAG ranges set out above, Ms. Coleman Kelly’s need and Mr. Kelly’s ability to pay.

[43] Given the benefit to Ms. Coleman Kelly of continuing to reside in the matrimonial home pending sale, I order that this interim spousal support shall commence on the first day of the first month after the closing of the sale of the matrimonial home. The issue of what spousal support should have been payable prior to this date, along with Mr. Kelly’s claim to occupation rent, are left to the trial judge for determination.

Sale of the Matrimonial Home

[44] Mr. Kelly seeks the sale of the matrimonial home. Ms. Coleman Kelly consents to the listing of the home for sale if she receives interim spousal support when it is sold. Given the order for spousal support above, I order the matrimonial home to be listed for sale.

Partial Summary Judgment

[45] Mr. Kelly seeks an order dismissing Ms. Coleman Kelly’s claim, as set out in her Answer, for “a post-separation adjustment providing the wife with two-thirds of the sale proceeds of the jointly-owned matrimonial home when it is sold, pursuant to the long-time verbal agreement between the husband and the wife”.

[46] Rule 16(6) of the Family Law Rules [3] requires the Court to grant summary judgment if there is no genuine issue requiring a trial. The moving party has the onus to provide evidence that there is no genuine issue requiring a trial. In response, the responding party may not rest on mere allegations or denials but is required to set out in her affidavit specific facts showing that there is a genuine issue for trial.

[47] As set out in Hryniak v. Mauldin:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result [4].

[48] In Hryniak v. Mauldin, the Supreme Court of Canada cautioned at para. 60:

The "interest of justice" inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.

[49] The determination of whether partial summary judgment is advisable must be considered within the context of the litigation as a whole. As the Court of Appeal stated in Butera v. Chown, Cairns LLP, 2017 ONCA 783, at para. 34:

A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.

[50] Ms. Coleman Kelly’s claim to two-thirds of the proceeds of sale from the matrimonial home relates to her contribution of approximately $200,000 from her personal injury settlement to the purchase of the home. Ms. Coleman Kelly’s position is that the parties had an oral agreement at the time they purchased the matrimonial home that Ms. Coleman Kelly would contribute the funds from her personal injury settlement in return for receiving two-thirds of the proceeds of sale. Ms. Coleman Kelly argues that she has provided partial performance of the contract, and therefore the Statute of Frauds, which would otherwise void a verbal transaction pertaining to unequal ownership of real property, does not apply.

[51] Ms. Coleman Kelly has not claimed an unequal division of net family property. Ms. Coleman Kelly’s position is that her entitlement to receive a greater portion of the proceeds of sale is separate and apart from the equalization calculation. In the equalization calculation, Ms. Coleman Kelly claims only a 50% ownership interest in the home.

[52] The main factual dispute between the parties on this issue is whether or not there was an oral contract that Ms. Coleman Kelly would contribute the funds from her personal injury settlement in return for receiving two-thirds of the proceeds of sale. Mr. Kelly denies that there was any such agreement or promise. Ms. Coleman Kelly states there was. The parties do not dispute that Ms. Coleman Kelly did in fact contribute her personal injury settlement funds to the purchase.

[53] Mr. Kelly’s position is that even if the oral agreement or promise was made, there is still no genuine issue for trial because:

a. the oral agreement is not a valid domestic contract that can have the effect of excluding property from equalization because it is not in writing; b. the oral agreement is void under the Statute of Frauds [5] because it pertains to real estate and is not in writing; and c. even if the agreement was not void, it would not make a difference to the equalization calculation because any greater share of the sale proceeds would be included in Ms. Coleman Kelly’s assets on date of separation, and be subject to equalization.

[54] I find there is a genuine issue requiring a trial to determine this issue. Neither party has provided additional supporting evidence on the issue of whether or not there was such an oral agreement or promise. A trial is required to make the necessary findings of fact to determine whether there was an oral agreement or promise with respect to the proceeds of sale of the home, the terms of that agreement or promise, and whether partial performance was provided such that the Statute of Frauds does not apply. Oral evidence is needed to determine each party’s credibility on this issue.

[55] I do not find that even if the oral agreement did exist, and was not void because it was not in writing, there would still not be a genuine issue for trial because it “would not make a difference”. Ms. Coleman Kelly has claimed that she is entitlement to two-thirds of the sale proceeds over and above the equalization payment. She has done this by arguing that on the date of separation, she was only a 50% owner of the property. While this may be a difficult argument for Ms. Coleman Kelly to succeed on, even if she was entitled to two-thirds of the proceeds of sale on the date of separation, this could still make a significant difference in the outcome, particularly if the value of the home at the time of sale is significantly different than at the date of separation.

[56] I also do not find that the issue of whether or not Ms. Coleman Kelly is entitled to two-thirds of the proceeds from the sale of the home is readily bifurcated from the other issues. The determination of this issue requires making findings of credibility on factual matters that impact on other issues that will be dealt with at trial, in particular spousal support, and will therefore either constrain the trial judge or risk inconsistent findings.

[57] I do not find that the determination of the issue of whether or not Ms. Coleman Kelly is entitled to two-thirds of the proceeds from the sale of the home without a trial will expedite the trial or reduce the cost to the parties. The evidence relating to Ms. Coleman Kelly’s contribution to the house, and her reasons for doing so, are inextricably intertwined with the evidence that relates to her claim to spousal support. The issue is not readily bifurcated from the other issues that require a trial. The determination of this issue also requires making findings of credibility on factual matters that will impact on the spousal support issues.

Disposition

[58] For the reasons above, I make the following orders:

a. Mr. Kelly shall pay interim spousal support to Ms. Kelly in the amount $2,300 per month, commencing on the first day of the first month following the sale of the matrimonial home; b. On an interim basis, to secure his spousal support obligation, Mr. Kelly shall maintain Ms. Coleman Kelly as the irrevocable beneficiary of his life insurance pending further court order or agreement between the parties; c. On consent, the matrimonial home located at 3725 Sixth Street, Ottawa, Ontario shall be listed for sale on the multiple listing service, on an immediate basis, with a real estate agent agreed on by both parties. Any agreement to sell the property will provide a closing date of at least 60 days in order for Ms. Coleman Kelly to have the opportunity to obtain alternate accommodation on the sale, unless otherwise agreed. If the parties are unable to agree on the terms of sale, either party may bring a motion before me (or other Judge if I am unavailable) on 5 days’ notice, to be scheduled through the trial coordinator’s office; and d. Mr. Kelly’s claim for summary judgment dismissing Ms. Coleman Kelly’s claim to two-thirds of the proceeds of sale of the matrimonial home is dismissed.

Costs

[59] If the parties are unable to agree on costs of this motion, Ms. Coleman Kelly may file submissions with respect to costs on or before June 28, 2019. Mr. Kelly may file submissions with respect to costs on or before July 10, 2019. Cost submissions of both parties shall be no more than three pages in length, plus any offers to settle and bills of costs, and shall be spaced one point five spaces apart, with no less than 12 point font.

Justice P. MacEachern Date: June 17, 2019

COURT FILE NO.: FC-18-617 DATE: 2019/06/17 ONTARIO SUPERIOR COURT OF JUSTICE

RE: PERRY WILLIAM MAX KELLY, Applicant -and- VALERIE COLEMAN KELLY, Respondent

BEFORE: Justice P. MacEachern

COUNSEL: Julius Dawn, for the Applicant Diana Carr, for the Respondent

ENDORSEMENT Justice P. MacEachern

Released: June 17, 2019

Footnotes:

[1] Fyfe v. Jouppien [2011] O.J. No. 4099 [2] Subject to valuation changes due to changes in the underlying factors applied by actuaries, such as, for example, interest rates. [3] Family Law Rules, O.Reg. 114/99, as am., Rule 16(6) [4] Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 49 [5] Statute of Frauds, R.S.O. 1990 c.S.19, ss. 1 and 9